RBI Allows Rupee Lending To Bhutan, Nepal And Sri Lanka
ECONOMY & POLICY

RBI Allows Rupee Lending To Bhutan, Nepal And Sri Lanka

The Reserve Bank of India (RBI) has permitted Indian banks and their overseas branches to lend in rupees to residents of Bhutan, Nepal, and Sri Lanka in order to facilitate cross-border trade transactions.

The move, announced on 1 October as part of the monetary policy outcome, forms part of the RBI’s ongoing efforts to ease external trade and payments under amendments to the Foreign Exchange Management Act (FEMA).

In addition, the RBI has extended the repatriation period to three months for foreign currency accounts maintained with banks in India’s International Financial Services Centres (IFSCs). The change is expected to encourage more exporters to open and operate such accounts with IFSC banking units.

Earlier, in January 2025, the central bank had allowed exporters to open foreign currency accounts with banks outside India for realisation of export proceeds, with unutilised balances to be repatriated by the end of the month following the realisation date.

With these measures, the RBI aims to promote internationalisation of the rupee, positioning the domestic currency as a stronger medium for regional trade and settlement.

The Reserve Bank of India (RBI) has permitted Indian banks and their overseas branches to lend in rupees to residents of Bhutan, Nepal, and Sri Lanka in order to facilitate cross-border trade transactions. The move, announced on 1 October as part of the monetary policy outcome, forms part of the RBI’s ongoing efforts to ease external trade and payments under amendments to the Foreign Exchange Management Act (FEMA). In addition, the RBI has extended the repatriation period to three months for foreign currency accounts maintained with banks in India’s International Financial Services Centres (IFSCs). The change is expected to encourage more exporters to open and operate such accounts with IFSC banking units. Earlier, in January 2025, the central bank had allowed exporters to open foreign currency accounts with banks outside India for realisation of export proceeds, with unutilised balances to be repatriated by the end of the month following the realisation date. With these measures, the RBI aims to promote internationalisation of the rupee, positioning the domestic currency as a stronger medium for regional trade and settlement.

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